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Benefits For Large Accounts At Vanguard And Fidelity

posted on September 1, 2015

Airlines and hotels assign elite status to their customers based on how much business the customers do with them. They give you Platinum, Gold, Diamond, Executive, and other nice sounding names. You get small incentives to make you feel special, such as priority boarding, late checkout, two bottles of water, and sometimes free upgrades.

Vanguard and Fidelity do the same. What difference do these service tiers really make?

Vanguard – Voyager

$50,000 invested in Vanguard funds and ETFs at Vanguard gets you the Voyager status. It qualifies you for the optional Personal Advisor Service — you pay 0.3% to have your accounts managed and your questions answered by a human advisor.

It’s a good milestone to hit if you want the Personal Advisor Service. Otherwise the Voyager status doesn’t do much. You get a different customer service phone number. You get $7 trades for stocks and non-Vanguard ETFs, which you can easily get elsewhere without $50k. Vanguard funds and ETFs trade free for everyone anyway. You get low balance fees waived without e-statements; you want e-statements anyway.

Vanguard – Voyager Select

At $500,000 in Vanguard funds and ETFs you get the Voyager Select status. The highlight now is you can consult a financial advisor without having to enroll in the Personal Advisor Service and pay 0.3%. You just get advice for free and you implement on your own.

You may or may not follow through consistently when you are left to your own devices but at least you get advice from a trained professional whenever you want it and it’s free. See the types of questions I asked a Vanguard advisor and how she answered them in Vanguard Financial Plan Review: (3) The Consultation.

Trades on stocks and non-Vanguard ETFs are now $2 each when you are Voyager Select. This is a small perk if you don’t get free trades elsewhere. You get another different customer service phone number, which supposedly puts you in touch with more experienced and maybe less busy reps.

Vanguard – Flagship

At $1 million in Vanguard funds and ETFs you get the Flagship status. You get an assigned rep, and 25 free trades on stocks and non-Vanguard ETFs. Because trades are already $2 each at the Voyager Select level, you don’t really save much with 25 free trades. The new perks are worth at best $50 a year. Flagship customers used to get free TurboTax; not any more.

The assigned rep is just that. You have a name but the same name is given to a lot of customers besides you. I found a Flagship rep on LinkedIn. His profile says he’s assigned to 600 customers.

If you are interested in actively managed funds, with Flagship status you can invest in closed funds. The notable closed funds are PRIMECAP, PRIMECAP Core, and Capital Opportunity funds, all of which are managed by PRIMECAP Management Company. All beat the market by a good margin, which is why they are closed. If these funds continue to beat the market on a risk-adjusted basis, being able to invest in them could be worth much more than the 25 free trades. Of course that’s a big if.

Vanguard – Flagship Select

It takes $10 million in Vanguard funds and ETFs to become Flagship Select. You get more attention from Vanguard. You can have personal consultations with Vanguard experts. You get 500 free trades but I doubt anyone at this level will care much about free trades.

Fidelity – Premium Services

Now we turn to Fidelity. When you have $250,000 at Fidelity, you get Premium Services status. Unlike Vanguard, all assets count, not just Fidelity house funds. You get a separate phone number for a group of more experienced and maybe less busy reps. You get outgoing wire transfer fees waived, which is free at Vanguard anyway. That’s about it. You don’t get any break on trading commissions.

Fidelity – Private Client

With $1 million at Fidelity, you get Private Client status. Now you get an assigned rep and maybe free TurboTax. It’s a “maybe” for free TurboTax because Fidelity doesn’t officially say what makes you qualify for it. Some clients get it; some don’t. There is still no break whatsoever on trading commissions.

As far as I can tell, Fidelity doesn’t have a formal program that offers free financial advice as a fiduciary. They can manage your portfolio for a fee but I would prefer Vanguard’s Personal Advisor Services if I want my portfolio managed, because Vanguard uses index funds.

***

Both Vanguard and Fidelity offer premium customer service to larger accounts. In addition, Vanguard offers some more meaningful perks, such as free consultation with a financial advisor as needed, lower commission for stocks and non-Vanguard ETFs, and investing in closed hot funds (I’m not saying it’s a good idea or not). Fidelity doesn’t offer much other than waiving the wire transfer fee.

[Photo credit: Flickr user Larry Johnson]

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“We determine eligibility by aggregating assets of all qualifying accounts held by the investor and his or her immediate family members who reside at the same address, including investments in Vanguard mutual funds, Vanguard ETFs®, certain annuities through Vanguard, The Vanguard 529 Plan, and certain small-business accounts. Assets in employer-sponsored retirement plans for which Vanguard provides recordkeeping services may be included in determining eligibility if the investor also has a personal account holding Vanguard mutual funds. Vanguard ETFs and Vanguard mutual funds held in a Vanguard Brokerage Account are also included when determining a household’s eligibility; other assets held in a brokerage account are not.”

Take careful note of that comment regarding Vanguard, “other assets held in a brokerage account are not [included].”

A few years back, I was a Flagship customer, then Vanguard notified me that I no longer met the qualifications. Turns out they didn’t count a buttload of stocks I held in a brokerage account. Silly me, I thought that Vanguard Brokerage was part of Vanguard.

I opened an account at Schwab, transferred the stocks, and have been far happier with their banking services than I ever was with Vanguard’s. Don’t get me wrong, I love Vanguard mutual funds and own several, some held at Vanguard, some at Fidelity. I still have accounts at Vanguard and highly recommend the company, but their banking services don’t compare with Schwab. The accounts I have at Vanguard are just a lot smaller now.

I have my Brokerage and Roth IRA with T Rowe Price for over 12 years and thought I’d share the privileges of their Select Client Services. I was a “Preferred” ($100K all accounts combined) about a decade ago and got free Moningstar membership ($199/year), I reached “Personal” level 4 years ago and got discounted Turbotax (I still had to pay some $30+ for Fed tax filing and paid full state tax filing). I should make it to “Enhanced Personal” ($1 mil) next year and TRP will throw in an additional free Wall Street Journal online subscription ($348/year). Their Advisory Planning Services (annual consultation with an advisor) is free if you have above $500K, otherwise it’s $250 per consultation.

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